(Incorporated in Zimbabwe on 2 July 1971 under Company Registration Number 643/71)
Short-Form Financial Announcement
For the half year ended 30 June 2022
Financial highlights
Ination adjusted | Ination adjusted | |
for the half year ended 30 June 2022 | for the half year ended 30 June 2021 | |
Revenue | ZWL 8.45 billion | ZWL 3.35 billion |
Occupancy | 41% | 24% |
Prot for the period | ZWL 5.86 billion | ZWL 18.58 billion |
Finance costs | ZWL 68.16 million | ZWL 30.16 million |
Average Daily Room Rate | ZWL 36,277 | ZWL 23,232 |
EBITDA | ZWL 7.30 billion | ZWL 19.39 billion |
Rooms Revenue Per Available Room | ZWL 15,563 | ZWL 5,632 |
Total Revenue Per Available Room | ZWL 29,002 | ZWL 11,685 |
Basic Earning/(loss) for the Period | 413.72 ZWL cents | 1,304.26 ZWL cents |
The Directors of African Sun Limited (the Company) are responsible for the short-form nancial announcement which is issued in terms of Practice Note 13 of the Zimbabwe Stock Exchange.
The short-form nancial announcement is only a summary of the information contained in the condensed consolidated nancial statements for the half year ended 30 June 2022. Any investment decisions by investors and and/or shareholders should be based on the complete condensed nancial statements for the half year ended 30 June 2022 published on the ZSE website: www.zse.co.zw and Company's website: www.africansunhotels.com/investorrelations. The condensed nancial statements for the half year ended 30 June 2022 are also available on request, at no charge, from the registered oce of the Company during working hours or via email on venon.musimbe@ africansunhotels.com.
Financial performance
Revenue
The ination adjusted revenue at ZWL8.45 billion, was 153% up compared with the same period last year ("SPLY"). The improved performance was driven by higher business volumes and rmer average daily rates ("ADR") at the back of increased demand. Hotel occupancy, at 41%, increased by 17 percentage points compared to the SPLY. This was, however, 4 percentage points lower than the occupancy levels achieved over the same period in 2019.
The Group's business continue to be predominantly domestic driven. However, we have also started to witness signs of recovery on the regional and international market front. Foreign business contributed 15% towards hospitality revenue, representing a 7 percentage point increase from the SPLY. The hospitality segment, which is the key driver of the Group's revenues and protability, contributed 95% of the total revenue whilst the real estate segment contributed 5%. Key contributors to the real estate segment revenues were residential stand sales at Marlborough Sunset Views as well as property consultancy revenue.
Operating Expenses
The increase in the Group's ination adjusted operating expenses (excluding depreciation), at 127% compared to the SPLY trailed the 153% increase in revenue. Operating expenses increased mainly due to increase in business volumes; and inationary pressures which the Group has also been experiencing even in United States of American Dollars ("USD") denominated costs. The Group will continue to monitor costs and implement various cost cutting initiatives.
Protability and liquidity
The Group recorded ination-adjusted earnings before interest, tax, depreciation and amortization ("EBITDA") of ZWL7.30 billion and prot after tax of ZWL6.07 billion as a result of improved business performances and rmer cost management initiatives.
Turning to liquidity, the Group is currently ungeared and had cash and cash equivalents of ZWL4.67 billion as at 30 June 2022. The Group is currently in discussions with local nancial institutions, earmarked at establishing standby nancing facilities for material hotel refurbishment projects that are in the pipeline.
INFLATION ADJUSTED | HISTORICAL COST | |||
30 June 2022 | 30 June 2021 | 30 June 2022 | 30 June 2021 | |
All gures in ZW$ | Reviewed | Reviewed | Reviewed | Reviewed |
Revenue Operating prot Prot for the period
Basic and diluted earnings per share
8,454,080,442 | 3,348,060,323 | 6,065,984,998 | 1,092,706,727 |
6,492,079,498 | 18,651,661,551 | 10,122,065,328 | 5,089,673,220 |
6,070,941,252 | 18,583,588,941 | 9,830,289,720 | 5,084,826,468 |
413.72 | 1,304.26 | 666.03 | 356.27 |
INFLATION ADJUSTED | HISTORICAL COST | |||
As at 30 June 2022 | As at 31 December 2021 | As at 30 June 2022 As at 31 December 2021 | ||
All gures in ZW$ | Reviewed | Audited | Reviewed | Audited |
Total assets | 74,970,165,077 | 48,460,087,902 | 71,108,445,732 | 21,060,963,465 |
Total equity | 61,087,777,586 | 40,807,884,924 | 54,841,109,283 | 17,214,997,484 |
Total liabilities | 13,882,387,491 | 7,652,202,978 | 16,267,336,449 | 3,845,965,981 |
Interim dividend declaration
The Board resolved to declare an interim dividend of ZWL0.102118 per share plus USD0.000545 per share, with respect to the half year ended 30 June 2022. A separate dividend notice will be issued with respect to the interim dividend declaration.
Outlook
The rst half of the year delivered performance that exceeded our initial expectation. Zimbabwe, like many destinations across the globe, continues to witness encouraging signs of a much accelerated recovery to the pre-pandemic tourism arrival levels. Inspite of the current global economic and geopolitical challenges, the UNTWO revised its outlook for 2022, projecting that with international arrivals are now expected to reach 55% to 70% of 2019 levels. We expect recovery of our international business to continue into the second half of the year.
External Auditor's review conclusion
These ination adjusted condensed consolidated nancial statements for the six months ended 30 June 2022 have been reviewed by Grant Thornton Chartered Accountants (Zimbabwe) in accordance with International Standards on Review Engagements (ISRE) 2410. The auditors have issued a qualied conclusion on the interim condensed consolidated nancial statements with respect to non-compliance with International Accounting Standard (IAS) 21 - The Eect of Changes in Foreign Exchange Rates, and International Financial Reporting Standard (IFRS) 3 -BusinessCombinations with respect to measurement of gain on bargain purchase on acquisition transaction in the prior nancial year.
The engagement partner on the audit resulting in the review conclusion auditor's report is Edmore Chimhowa (PAAB Number 0470).
Directors:E. A. Fundira (Chairman), P. Saungweme (Chief Executive Officer)*, N. Mutizwa (Chief Finance Officer)*, G. Chikomo, C. Chikosi, B. Childs, V.W. Lapham,
L.M. Mhishi, T. M. Ngwenya, A.E. Siyavora. * Executive
Registered Office: Monomotapa Hotel, Number 54 Park Lane, Harare, Zimbabwe. Email: venon.musimbe@africansunhotels.com, Web: www.africansunhotels.com
Independent Auditor: Grant Thornton Chartered Accountants (Zimbabwe), Camelsa Business Park, 135 Enterprise Road, Harare, Zimbabwe
Reviewed Condensed Consolidated Financial
Statements for the half year ended
30 June 2022
Contents
Directorate and corporate information | 1 |
Chairman's statement | 2 |
External auditor's review conclusion | 5 |
Condensed consolidated statement of financial position | 6 |
Condensed consolidated statement of comprehensive income | 7 |
Condensed consolidated statement of changes in equity | 8 |
Condensed consolidated statement of cash flows | 12 |
Notes to the condensed consolidated financial statements | 13 |
These reviewed condensed consolidated financial statements are presented in Zimbabwe Dollars ("ZWL").
Statement of Vision
To be the leading Hospitality and Leisure Company in the markets we operate.
MISSION
We exist to create value for all our stakeholders.
-
To our Guests
Exceeding their expectations through provision of a delightful service, as they are our reason for existence. - To our Employees
Creating opportunities for personal growth and balanced lifestyles for all our staff to enable them to positively influence lives around them and delight our guests. - To our Community and Environment
To be a model corporate citizen in the society in which we operate from where we derive our identity and being. - To our Business Partners
Establishing ethical and honest relationships with our business partners and suppliers who enable us to meet and exceed our guest expectations. - To our Shareholders
Deliver real value growth to our shareholders in excess of 20% return on equity per annum.
OUR CORE VALUES AND BELIEFS
Our seven-point "PRILFSC" value system forms the basis our belief system within the organization
We will do so through:
- Professionalism - We exude expert competence in the way we do business.
- Respect - In all our relationships, we seek to build and honor.
- Integrity - We do what we say. We are true to self and true to others.
- Leisure - We enjoy everything we do.
- Fairness - We are a non-discriminate organization and we treat everyone equally.
- Service Excellence - We meet and exceed customer expectations.
- Care - We show concern and seek the well-being of everyone.
AFRICAN SUN LIMITED - Reviewed condensed consolidated financial statements for the half year ended 30 June 2022
Directorate and corporate information
DIRECTORS | |
E.A. Fundira | Chairman |
P. Saungweme* | Chief Executive Officer |
N.Y. Mutizwa* | Chief Finance Officer |
B.I. Childs | |
G. Chikomo | |
T.M. Ngwenya | |
L.M. Mhishi | |
C.F. Chikosi | |
A.E. Siyavora | |
V.W. Lapham | |
*Executive | |
Company Secretary | |
V.T. Musimbe |
African Sun Limited
Incorporated and domiciled in the Republic of Zimbabwe Registration number: 643/1971
Registered Office
African Sun Limited, c/o Monomotapa Harare
54 Parklane, Harare, P.O. Box CY 1211, Causeway, Harare, Zimbabwe
Tel: +263 242 338232 -6, +263 78 270 5382, +263 78 270 5379, +263 78 270 5384
Email: venon.musimbe@africansunhotels.com
Web: www.africansunhotels.com
Independent Auditor
Grant Thornton Chartered Accountants (Zimbabwe)
Camelsa Business Park, 135 Enterprise Road,Harare, Zimbabwe
Main Bankers
FBC Bank Limited
5th Floor, FBC Centre, Nelson Mandela Avenue, Harare, Zimbabwe
Nedbank Zimbabwe Limited
16th Floor, Old Mutual Centre, Third Street, Harare, Zimbabwe
Legal Advisors
Dube, Manikai and Hwacha Commercial Law Chambers
6th Floor, Gold Bridge, Eastgate Complex, Robert Mugabe Road, Harare, Zimbabwe
Transfer Secretaries
Corpserve (Private) Limited
2nd Floor, ZB Bank Centre, Cnr Kwame Nkrumah Avenue/First Street, P.O. Box 2208, Harare, Zimbabwe Tel: +263 242 758193
Email: paradzai@escrowgroup.org
Investor Relations
Web: www.africansunhotels.com
1
Chairman's statement
Financial highlights
Inflation adjusted | Inflation adjusted | |
for the half year ended | for the half year ended | |
30 June 2022 | 30 June 2021 | |
Revenue | ZWL 8.45 billion | ZWL 3.35 billion |
Occupancy | 41% | 24% |
Profit for the period | ZWL 5.86 billion | ZWL 18.58 billion |
Finance costs | ZWL 68.16 million | ZWL 30.16 million |
Average Daily Room Rate | ZWL 36,277 | ZWL 23,232 |
EBITDA | ZWL 7.30 billion | ZWL 19.39 billion |
Rooms Revenue Per Available Room | ZWL 15,563 | ZWL 5,632 |
Total Revenue Per Available Room | ZWL 29,002 | ZWL 11,685 |
Basic Earnings Per Share for the Period | 413.72 ZWL cents | 1,304.26 ZWL cents |
in Ukraine that continues to fuel inflation. The higher- than-expected global inflation and rising interest rates potentially drive higher travel costs and negatively weigh on consumer spending, inevitably eroding disposable income that feeds into our leisure business.
Financial performance
During the first half of 2022, the Group delivered performance that was ahead of the SPLY in spite of the challenging economic environment that prevailed during the period under review.
Revenue
The inflation adjusted revenue at ZWL8.45 billion, was 153% up compared with the SPLY. The improved performance was driven by higher business volumes and firmer average daily rates ("ADR") at the back of increased demand. Hotel occupancy, at 41%, increased by 17 percentage points compared to the SPLY. This was, however, 4 percentage points lower than the occupancy levels achieved over the same period in 2019.
The Group's business continue to be predominantly
Profitability and liquidity
The Group recorded inflation-adjusted earnings before interest, tax, depreciation and amortization ("EBITDA") of ZWL7.30 billion and profit after tax of ZWL6.07 billion as a result of improved business performances and firmer cost management initiatives.
Turning to liquidity, the Group is currently ungeared and had cash and cash equivalents balance of ZWL4.67 billion as at 30 June 2022. The Group is currently in discussions with local financial institutions, earmarked at establishing standby financing facilities for material hotel refurbishment projects that are in the pipeline.
Update on acquisition of Dawn Properties Limited ("DPL")
I am pleased to report that during the period under review, the Group successfully concluded the acquisition of the remaining DPL issued shares. Consequently, the Company now wholly owns DPL. The integration of DPL which commenced in 2021 is progressing well and is on track to be completed by 31 December 2022.
Introduction
On behalf of the Board of Directors of African Sun Limited ("the Company") and its subsidiaries (together referred to as "the Group"), it gives me pleasure to present to you the reviewed condensed consolidated financial statements for the half-year ended 30 June 2022.
Operating environment
The Covid-19 pandemic's hold on everyday life has significantly waned compared to the same period last year ("SPLY"). Six months into 2022, a sense of optimism has returned, as the demand for travel is beginning to show significant improvement. According to the latest United Nations World Tourism Organization ("UNWTO") World Tourism Barometer, international tourism witnessed a strong rebound in the first five months of 2022, with almost 250 million international arrivals recorded, comparing favorably to the 77 million tourist arrivals between January to May 2021. The current year tourist arrival levels reflect recovery of 46% compared to pre-pandemic 2019 levels (the last normal trading year
before the outbreak of Covid-19). Based on data from STR - a global hospitality industry benchmarking and marketplace insights provider, global occupancy rates increased to 66% in June 2022, in comparison to 43% in January 2022. During the same period, the Group also recorded a generally gradual and consistent increase in occupancy, closing June 2022 with 54% compared with 28% recorded in January 2022. The uptick in international arrivals is gathering pace and points towards a strong second half of the year leading into our peak summer season.
The Minister of Finance and Economic Development during the 2022 Mid-Term Budget presentation revised the 2022 economic growth projection downwards to 4.6% from the initial 5.5%. Globally, the International Monetary Fund ("IMF"), in its July 2022 update forecasted global economic slowdown from 6.1% in 2021 to 3.2% in 2022, and a further reduction to 2.9% in 2023. The downgrade of both the local and global economic growth forecasts is mainly attributable to the adverse impact of the war
domestic driven. However, we have also started to witness signs of recovery on the regional and international market front. Foreign business contributed 15% towards hospitality revenue, representing a 7 percentage point increase from the SPLY. The hospitality segment, which is the key driver of the Group's revenues and profitability, contributed 95% of the total revenue whilst the real estate segment contributed 5%. Key contributors to the real estate segment revenues were residential stand sales at Marlborough Sunset Views as well as property consultancy revenue.
Operating expenses
The increase in the Group's inflation adjusted operating expenses (excluding depreciation), at 127% compared to the SPLY trailed the 153% increase in revenue. Operating expenses increased mainly due to increase in business volumes; and inflationary pressures which the Group has also been experiencing even in United States of American Dollars ("USD") denominated costs. The Group will continue to monitor costs and implement various cost cutting initiatives.
The Group's strategy to rationalize its asset base by disposing non-core real estate assets to unlock much needed liquidity for targeted capital expenditure on core operations, is progressing well. As of the date of this report, the Group had raised USD1,7 million from the disposal of non-core assets, including proceeds from the former Brondesbury Park Hotel in Nyanga. The former Beitbridge Express Hotel property and 100% equity stake in Dawn Property Consultancy (Private) Limited, which are the principal non-core investments yet to disposed off, are being actively marketed.
Update on refurbishments
Our cash utilization strategy remains unchanged, focusing mainly on targeted capital expenditure on hotel assets in order to enhance guest experience and to preserve value. Earlier this month, we celebrated the highly anticipated completion of 47 rooms and kitchen refurbishment at the majestic five-star Victoria Falls Hotel, "the Grand Old Lady". The Group, together with our partner - Meikles Limited, invested over USD4.5million towards the refurbishment of this property.
2 | AFRICAN SUN LIMITED - Reviewed condensed consolidated financial statements for the half year ended 30 June 2022 | 3 |
Chairman's statement (continued)
The Group completed the refurbishment of 32 rooms at Troutbeck Resort in July 2022, while the remaining 37 rooms are targeted for completion beginning of October 2022. Work on Hwange Safari Lodge rooms refurbishment commenced in August 2022; whilst the refurbishment of the remaining rooms at Great Zimbabwe Hotel, including the conference centre is at an advanced stage.
Update on The Kingdom at Victoria Falls hotel exit
As reported at the Company's last Annual General Meeting in June 2022, the Company will be exiting The Kingdom at Victoria Falls Hotel. Currently, management is seized with the implementation of a structured and smooth exit plan.
Interim dividend declaration
The Board resolved to declare an interim dividend of ZWL0.102118 per share plus USD0.000545 per share, with respect to the half year ended 30 June 2022. A separate dividend notice will be issued with respect to the interim dividend declaration.
Outlook
The first half of the year delivered performance that exceeded our initial expectation. Zimbabwe, like many destinations across the globe, continues to witness
encouraging signs of a much accelerated recovery to the pre-pandemic tourism arrival levels. Inspite of the current global economic and geopolitical challenges, the UNTWO revised its outlook for 2022, projecting that international arrivals are now expected to reach 55% to 70% of 2019 levels. We expect recovery of our international business to continue into the second half of the year.
Directorate changes
There were no changes to the directorate during the period under review.
Appreciation
My sincere gratitude goes to staff for their continued hard work. To my fellow Directors, I am very grateful for your continued support as we transition from Covid-19 survival to steady recovery. To our stakeholders, thank you for the continued patronage.
E A Fundira
Chairman
22 September 2022
External Auditor's review conclusion
These inflation adjusted condensed consolidated financial statements for the six months ended 30 June 2022 have been reviewed by Grant Thornton Chartered Accountants (Zimbabwe) in accordance with International Standards on Review Engagements (ISRE) 2410. The auditors have issued a qualified conclusion on the interim condensed consolidated financial statements with respect to non-compliance with International Accounting Standard (IAS) 21 - The Effect of Changes in Foreign Exchange Rates, and International Financial Reporting Standard (IFRS) 3 -BusinessCombinations with respect to measurement of gain on bargain purchase on acquisition transaction in the prior financial year.
The engagement partner on the audit resulting in the review conclusion auditor's report is Edmore Chimhowa (PAAB Number 0470).
4 | AFRICAN SUN LIMITED - Reviewed condensed consolidated financial statements for the half year ended 30 June 2022 | 5 |
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African Sun Ltd. published this content on 23 September 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 September 2022 07:49:05 UTC.